Question 2 [25 Marks] The Extract of Income Statement and Statements of Financial Position of Mrs...

 

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Question 2 [25 Marks] The Extract of Income Statement and Statements of Financial Position of Mrs S. Samou, a sole trader, are shown below: ASSETS Non-current assets Land Property, Plant & Equipment Current assets Inventory (stock) Accounts Receivable (Debtors) Less: Allowance for doubtful debts Bank Total current assets Current liabilities Accounts Payable (Creditors) Working Capital Non-current liabilities 9% Loan NET ASSETS Mrs S. Samou Statements of Financial Position as at 30 June Financed by: Opening Capital Additional Capital introduced (by cheque) Net profit Drawings Closing Capital Cost £ 22,500 2021 Acc. Dep* NBV** £ £ 337,500 337,500 427,500 303,750 (121,500) 182,250 225,000 641.250 (121,500) 519,750 652,500 0 61,875 22,500 5,175 89,550 (72,000) * Acc. Dep. means Accumulated Depreciation ** NBV means Net Book Value 17,550 537,300 0 537,300 461,250 45,000 53,550 Cost £ 559,800 (22,500) 537,300 56,250 (5,625) 2022 Acc. Dep* £ (175,500) (175,500) 101,250 50,625 98,975 250,850 (93,375) NBV** £ 427,500 49,500 477,000 157,475 634,475 (67,500) 566,975 537,300 75,800 10,575 623,675 (56,700) 566,975 Gross profit Gain (profit) on disposal of Plants & Equipment Total Income Mrs S. Samou Extract from Income Statement for the year ended 30 June 2022 £ Less: Expenses Wages and salaries Lighting and Heating Increase in allowance for doubtful debts Depreciation: Property, Plant & Equipment Interest expense paid Net profit Notes: I. II. 168,750 61,425 5,625 72,000 6,075 Proceeds from the disposal of Property, Plant & Equipment amounted to £112,500 Required: During the year to 30 June 2022, Land was bought for £90,000 a) Prepare a Cash Flow Statement for the year ended 30 June 2022. £ 272,700 51.750 324,450 c) For the ratio calculated in b), state which financial year the business has a better ROCE. d) Provide two reasons why Cash Flow Statements are important for a business. (313,875) 10,575 b) Using the financial statements above, calculate the return on capital employed ratio (ROCE) for both financial years (year to 30 June 2021 and year to 30 June 2022: (18 marks) (4 marks) (1 mark) (2 marks) Question 2 [25 Marks] The Extract of Income Statement and Statements of Financial Position of Mrs S. Samou, a sole trader, are shown below: ASSETS Non-current assets Land Property, Plant & Equipment Current assets Inventory (stock) Accounts Receivable (Debtors) Less: Allowance for doubtful debts Bank Total current assets Current liabilities Accounts Payable (Creditors) Working Capital Non-current liabilities 9% Loan NET ASSETS Mrs S. Samou Statements of Financial Position as at 30 June Financed by: Opening Capital Additional Capital introduced (by cheque) Net profit Drawings Closing Capital Cost £ 22,500 2021 Acc. Dep* NBV** £ £ 337,500 337,500 427,500 303,750 (121,500) 182,250 225,000 641.250 (121,500) 519,750 652,500 0 61,875 22,500 5,175 89,550 (72,000) * Acc. Dep. means Accumulated Depreciation ** NBV means Net Book Value 17,550 537,300 0 537,300 461,250 45,000 53,550 Cost £ 559,800 (22,500) 537,300 56,250 (5,625) 2022 Acc. Dep* £ (175,500) (175,500) 101,250 50,625 98,975 250,850 (93,375) NBV** £ 427,500 49,500 477,000 157,475 634,475 (67,500) 566,975 537,300 75,800 10,575 623,675 (56,700) 566,975 Gross profit Gain (profit) on disposal of Plants & Equipment Total Income Mrs S. Samou Extract from Income Statement for the year ended 30 June 2022 £ Less: Expenses Wages and salaries Lighting and Heating Increase in allowance for doubtful debts Depreciation: Property, Plant & Equipment Interest expense paid Net profit Notes: I. II. 168,750 61,425 5,625 72,000 6,075 Proceeds from the disposal of Property, Plant & Equipment amounted to £112,500 Required: During the year to 30 June 2022, Land was bought for £90,000 a) Prepare a Cash Flow Statement for the year ended 30 June 2022. £ 272,700 51.750 324,450 c) For the ratio calculated in b), state which financial year the business has a better ROCE. d) Provide two reasons why Cash Flow Statements are important for a business. (313,875) 10,575 b) Using the financial statements above, calculate the return on capital employed ratio (ROCE) for both financial years (year to 30 June 2021 and year to 30 June 2022: (18 marks) (4 marks) (1 mark) (2 marks)

Answer rating: 100% (QA)

a Cash Flow Statement for the year ended 30 June 2022 Cash flow from operating activities Net Profit ... View the full answer